| WILMINGTON, Del
WILMINGTON, Del Oct 8 A tenacious U.S. hedge
fund and an Irish property developer were blocked on Tuesday by
a U.S. federal judge from digging into the secretive
communications that led to Ireland's decision to liquidate
former Anglo Irish Bank.
Elliot Management, billionaire Paul Singer's hedge fund, and
John Flynn failed to convince a U.S. Bankruptcy Court judge to
allow them to demand a broad range of information that they said
could prove the bank was solvent when put into liquidation.
"The court is not inclined, at least for now, to perform a
forensic analysis of Ireland's legislative and executive
departments," said U.S. Bankruptcy Court Judge Christopher
Sontchi of Wilmington, Delaware.
The former bank was at the heart of last decade's property
boom and bust in Ireland and the lender was put into an
accelerated liquidation during an emergency session of Ireland's
parliament in February.
Now known as Irish Bank Resolution Corp, or IRBC, the
liquidating bank applied in August for U.S. court protection to
prevent creditors from going after more than $1 billion in U.S.
While the liquidator overseeing the former bank won an
initial legal skirmish on Tuesday, a battle still looms over
whether Sontchi will grant IBRC protection under Chapter 15 of
the U.S. bankruptcy code.
No date has been set for that hearing, which will be decided
based on legal arguments rather than with a trial complete with
witnesses as Elliott had sought.
Elliot Management owns $75 million in notes issued by IBRC
and wanted to investigate its allegations that politics drove
the decision to liquidate the bank. That decision led to assets
being undervalued to the detriment of creditors, who had
expected the bank to be gradually wound down over a decade,
according to Elliott.
Chapter 15 protection would freeze any U.S. litigation
against IBRC, including a case in Manhattan's federal court
brought by Flynn alleging he was overcharged $11 million by
The liquidators acknowledge Flynn was overcharged, but
dispute the amount he is owed.
Flynn failed to convince Sontchi to allow him to proceed
with his lawsuit in Manhattan's federal court.
"You win some, you lose some," Flynn said on the way out of
court after five hours of hearings and testimony. His lawyer was
"We're off to Philadelphia," said Lawrence O'Neill of the
O'Neill & Co, referring to the U.S. Court of Appeals for the
Van Durrer, an attorney for Skadden, Arps, Slate, Meagher &
Flom, who represents IBRC, declined to comment on the possible
While Chapter 15 protection is routinely granted to foreign
companies by U.S. Bankruptcy Courts, last year Judge Harlin Hale
in Dallas denied recognition of a Mexican proceeding involving
glassmaker Vitro SAB.
Without U.S. bankruptcy court protection, creditors were
able to secure judgments against Vitro's assets in U.S. state
courts, which helped lead to a settlement. The creditors in that
case were also led by Elliott Management.